Why A Duck

From Vaudeville to the Silver Screen to the Small Screen, the Marx Brothers made an impact wherever people found them. Now Tom Fox and Mike Volkov have wedded their love of the Marx Brothers with their passion for compliance and bring them into the boardroom to help explain and explore the sometimes-chaotic world of governance, risk-management, ethics and compliance. In this episode they discuss the movie Coconuts and how it informs the three SEC fiscal year end FCPA enforcement actions. Highlights from the podcast include:

1. What can we learn from Quad/Graphics and sham 3rd parties?
2. Beware of over expansion without appropriate FCPA controls.
3. Why does control override inform the enforcement action involving Westport Fuels Systems?
4. The M&A implications of Westport Fuels Systems?
5. Why does the Barclays FCPA enforcement action get back to FCPA basics?
6. How effective is your training program?

Resources

From Tom Fox

1. Westport Fuels
2. Barclays
3. Quad/Graphics  

From Mike Volkov

1. Barclays
2. Quad Graphics

Marx Brothers

Coconuts-the full movie on YouTube.

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From Vaudeville to the Silver Screen to the Small Screen, the Marx Brothers made an impact wherever people found them. Now Tom Fox and Mike Volkov have wedded their love of the Marx Brothers with their passion for compliance and bring them into the boardroom to help explain and explore the sometimes-chaotic world of governance, risk-management, ethics and compliance. In this episode they discuss the movie Coconuts and how it informs the OFAC Compliance Framework. Highlights from the podcast include:

1. Why has Mike Volkov called the OFAC Compliance Framework a ‘game-changer’?
2. How does the OFAC Framework illustrate regulatory convergence?
3. What are some of the highlights of the OFAC Framework?
4. What are some of the key lessons learned for the ABC compliance professional?
5. How does data analytics as mandated in the OFAC Framework inform ABC compliance programs going forward?
6. What are the mandates built into the OFAC Framework?
7. How can an ABC compliance practitioner use the OFAC Framework if their company is under FCPA scrutiny?

Resources

1. From Tom Fox-see articles on the OFAC Compliance Framework.
2. Introduction
3. Management Commitment
4. Risk Assessment
5. Internal Controls
6. Testing, Training and Auditing
7. From Mike Volkov-See article on the OFAC Compliance Framework.
8. Introduction
9. Risk Assessments and Internal Controls
10. Testing and Auditing and Training
11. Review of Lessons Learned
12. Download a copy of the OFAC Compliance Framework, here.

Marx Brothers

Coconuts-the full movie on YouTube.

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From Vaudeville to the Silver Screen to the Small Screen, the Marx Brothers made an impact wherever people found them. Now Tom Fox and Mike Volkov have wedded their love of the Marx Brothers with their passion for compliance and bring them into the boardroom to help explain and explore the sometimes-chaotic world of governance, risk-management, ethics and compliance. In this episode they discuss the movie Horsefeathers and how it informs the recent Juniper Networks FCPA enforcement action.  Highlights from the podcast include:Why was this enforcement action so significant (or not)?Why does third-party management continue to bedevil so many companies?Why AP is a key gatekeeper for a best practices compliance program?What are some of the key lessons learned for the compliance professional?How does data analytics from this enforcement action inform compliance programs going forward?Why is GTE such a low hanging fruit for compliance programs?Why are slush funds so problematic under the FCPA?ResourcesFrom Tom Fox-see article Juniper Networks FCPA Enforcement Action: Speak Sternly and Enhance Controls, click here.From Mike Volkov-See article Juniper Networks Settles FCPA Violations with SEC or $11.7 Million, click here.Download a copy of the SEC Cease and Desist Order, here.Marx Brothers

Horsefeathers-the full movie on YouTube.

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From Vaudeville to the Silver Screen to the Small Screen, the Marx Brothers made an impact wherever people found them. Now Tom Fox and Mike Volkov have wedded their love of the Marx Brothers with their passion for compliance and bring them into the boardroom to help explain and explore the sometimes chaotic world of governance, risk-management, ethics and compliance. In this episode they discuss the movie Horsefeathers and the recently released DOJ Antitrust Division compliance guidance.  Highlights from the podcast include:Why is this document so significant?How will the Evaluation be used at the Charging Phase? At the Sentencing Phase?What is different in this Guidance from the ABC Guidance issued in April by the Criminal Division?What are some of the key lessons learned for the ABC compliance professional?How does data analytics from the Antitrust Division Guidance inform ABC compliance programs going forward?How does the Antitrust Guidance, working in conjunction with OFAC’s Sanctions Enforcement Guidelines and the Criminal Division’s 2019 Compliance Guidance demonstrate the need to break down the silos around compliance?Where does compliance go from here?Resources

New Antitrust Compliance GuidanceFrom Tom Fox-eBook on The Antitrust Division Guidance on an Effective Compliance Program, available on CCI, here at no cost.From Mike Volkov-Two-part series on DOJ’s Antitrust Division Announces New Policy for Crediting Corporate Compliance Programs. Part Iand Part 2.Download a copy of the new Antitrust Division Guidance, here.Marx Brothers

Horsefeathers-the full movie on YouTube.

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Tom begins this episode by summarizing his favorite Marx Brothers movie Duck Soup. The scene where Pinky and his cohort report to Trentino is a fitting metaphor for surveillance and aptly introduces Microsoft’s FCPA Enforcement Action of July 2019.

Microsoft’s Hungarian subsidiary admitted to 3rd party vendors engaging in bribery and corruption. Discounts of up 28-32% were granted without documentation to support their justification. This money was routed to corrupt foreign officials as bribes.

As part of their remediation, Microsoft has taken steps to increase its capability to prevent violations by using Machine Learning to help identify transactions and automatically flag those that pose heightened risk. A compliance team then applies scrutiny to these flagged transactions.

Microsoft devised a Transaction Monitoring system into which Business Development employees have to input information about business opportunities. This information is run through the Machine Learning tool which assigns it a risk rating. The tool is prepopulated with risk management strategies and techniques which salespeople can implement right away. Transaction monitoring is done pre-contract, which allows Microsoft to respond in a quicker and more expeditious manner. It also positively impacts the company’s profitability.

A similar compliance solution is an efficient way for a company to come up with bids, respond to true market forces, and protect against third-party misconduct, says Mike. Control persons and gatekeepers are key players in such a solution and therefore, need to be trained to give them the tools to raise compliance issues. Data analytics would make the process even more effective.

ResourcesDuck Soup – full movieBrad Smith’s email to Microsoft employees

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Mike’s favorite Marx Brothers movie Day at the Races is a fitting analogy for the race to effective compliance. Mike shares his favorite lines from the movie after which the discussion focuses on 3 Best Practices Compliance programs from the Criminal Division of the Department of Justice and OFAC.

Tom points out that each guidance document has a different focus depending on who released it. The Antitrust Guidance for example, is focused on criminal antitrust behavior: that is, the intention to defraud the market based on market fixing, cartel behavior or other intentional acts by more than one group or person. Each one of the documents gives greater insight to anti-corruption practitioners to incorporate into their compliance program.

There are elements that are common to all three documents. Mike says this emphasizes the importance of operationalizing your program to cut through the silos that exist in compliance. Compliance now has a reason to bring together all these elements into one comprehensive training program.

The Criminal Division of the Department of Justice asks for continuous monitoring of the compliance program. We need to take the data and loop it back into the compliance program to continually improve. Antitrust monitoring takes a statistical look at contract data over long periods of time to discover indications of cartel or price-fixing behavior. Anti-corruption monitoring shows the need for overall transaction monitoring from a compliance perspective so that red flags or anomalies are detected early on.

Once you have a database of contracts you can now have effective business analysis. You can analyze discounts given to customers over time and compare and contrast profit margins of contracts by geographical area or business unit. This is going to put the Compliance at the table for business discussions going forward. Compliance now becomes part of the business plan.

Resources OFAC Compliance document Criminal Division Compliance document Antitrust Division Compliance document

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Hosts Tom Fox and Mike Volkov launch their new podcast series by talking about their favorite Marx Brothers movies and how it leads to a broader description of compliance. The title Why a Duck comes from a line in the famous 1929 Marx Brothers film Coconuts: “ Why a duck? Why no chicken? Why no horse?”

Duck Soup is Tom’s favorite Marx Brothers movie. The film depicts a series of farcical efforts where rivals try to overthrow Rufus T. Firefly. It is political chaos at its finest. Tom especially enjoys the mirror scene.

Mike’s favorite Marx Brothers movie is Day at the Races. Hugo Hackenbush is a vet posing at a doctor at Standish Sanatorium to take care of his wealthy patient Emily Upjohn. The sanatorium is in financial trouble. The film shows his hilarious schemes to get a horse to win a race so that he can pay off the sanatorium debts.

Mike shares a funny story of how the Marx brothers cornered Irving Thalberg into a meeting.

Resources Duck Soup – The Mirror Scene 

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